- GBP/USD holds lower ground within monthly trading range.
- UK government up for four-week extension to June 21 unlock deadline amid Delta variant fears.
- EU pushes British PM Johnson to keep his word Brexit, France ready to reset relations if he does.
- US dollar bids supersede UK’s strong GDP, light calendar ahead.
GBP/USD begins the week mostly unchanged around 1.4110 during the initial Asian session on Monday. In doing so, the cable seems to pay a little heed to the recent price-negative headlines concerning the Brexit and an extension to the date of lifting major coronavirus (COVID-19) activity restrictions. Even so, the cable remains pressured amid broad US dollar strength and downbeat UK news.
US President Joe Biden refrained from taking a tough stand on Brexit, as widely anticipated. However, the European Union (EU) policymakers cheered support from America to push the UK towards pre-agreed Brexit terms on the Northern Ireland (NI) during the latest Group of Seven (G7) meeting. Though Reuters conveyed positive from France while saying, “French President Emmanuel Macron offered on Saturday to reset relations with Britain as long as Prime Minister Boris Johnson stands by the Brexit divorce deal he signed with the European Union.”
On the other hand, The Times confirmed the market speculations of a delay in the UK’s unlock amid rising Delta variants of the covid. The extension to the much-awaited June 21 expiry of the activity restrictions was initially suggested by Chris Whitty, the chief medical officer for England and Sir Patrick Vallance, the chief scientific adviser. That said, The Times cites a 49% weekly jump in the covid cases to 7,490 as the key catalysts for the latest action.
It’s worth noting that the UK’s April month GDP of 2.3% couldn’t save GBP/USD from the broad US dollar strength amid safe-haven demand ahead of this week’s Federal Open Market Committee (FOMC). Also adding to the greenback’s strength were firmer prints of the Michigan Consumer Confidence Index from the US, 86.4 in June from 82.9 previously.
Looking forward, a light calendar and confirmation of the hyped news, coupled with the pre-Fed caution and an absence of traders from Australia and China, could restrict short-term GBP/USD moves. However, updates over the Aussie-UK trade deal and covid may offer intermediate moves to the cable pair.
A broad trading range between 1.4080 and 1.4220 restricts GBP/USD moves since mid-May. However, a two-week-old ascending support line near 1.4075 adds strength to the downside support and tests the bears.